In aggregate terms, bank loans advanced 16.3% in June. Retail loans climbed more than a fifth on year, supported mainly by home and vehicle loans, the latest central bank data showed. Bank loans to non-bank lenders climbed, and so did the disbursements to large companies.
“The rapid pace of personal (retail) loan growth (both housing and non-housing) has been supporting overall credit expansion,” said a report on the state of the economy published in the central bank’s latest monthly bulletin. “Accordingly, the share of personal loans in total bank credit has surged to 28% in 2022-23 from 21% in 2017-18.”
Loans to industries rose 8.1% in June as compared with 9.5% in June last year. But loans to large firms climbed almost at double the pace of last year – at 6.4% versus 3.2%.
Revival in loans to large firms could be attributed to capital expenditure.
“Several corporates have expressed intentions to expand capex over the near term, albeit largely concentrated in the infrastructure and auto space,” said a report by economics research firm QuantEco Research.
“Improvement in credit off-take by banks and the government’s capex push remain as tailwinds that could usher in a wider private sector capex recovery, premised on domestic consumption continuing to offer support,” said the report.
Credit to both small and medium sized firms slowed this June. Credit to medium industries grew 13.2% (47.8% last year) and micro and small industries by 13% (29.2% a year ago).